Understanding the Landscape of Asia Pacific Payroll

A Snapshot of Payroll Management in the Asia Pacific Region

The Asia Pacific region contains such sufficient diversity of both culture and economy that there
is no one overarching business environment. Markets range from emerging to highly mature, and
HR and payroll practices can vary from bare-bones to cutting-edge and everything in between.
In fact, as a recent Towers Watson report, Everything Is Possible; Nothing Is Easy, What You
Need to Know About HR Service Delivery in Asia, states, “Labor costs, technology infrastructure,
governance and legislation, decision-making processes, work practices, culture and, of course,
language all differ markedly from country to country”. Of interest though is that this same report
cites that the Asia Pacific region both holds and demands what many have come to see as some
of the most modern staples of HR and global payroll management; such as centers of excellence
(CoE), business partner roles, shared services centers, outsourcing, technology solutions and self-
service. Even so, these forward-thinking practices are anything but uniform in their adoption,
and organizations operating (or looking to operate) in this region must recognize that any Asia
Pacific payroll or HR function must take into account the countless region-specific factors that
are present—the ignorance of which could significantly slow (or even potentially derail) a payroll
strategy.

Asia Pacific Payroll Factor #1: Outsourcing-as-an-Option

Leaving aside countries such as Australia, New Zealand and Japan, the situation as outlined by the
abovementioned Towers Watson report is such that, “In many Asian countries, there simply is, as
of yet, no HR service delivery model”. From a very practical standpoint, this means that many HR
and payroll processes are still paper-based and quite often unsophisticated and poorly defined. For
fast-growing companies within the region, these challenges are being addressed through strategies
such as outsourcing—a tactic that, especially for payroll, allows for organizations to instantly
acquire requisite operational expertise and experience. As a result (and as opposed to the Western
world’s outlook) outsourcing is often seen as one of the first strategies that companies look to
employ, rather than a last resort—a fact that has led to an increasing presence from HR and payroll
outsourcing vendors.

Asia Pacific Payroll Factor #2: Standardization Challenges

Utilizing a single, global HR and payroll management system is fast becoming a norm for those
organizations operating multi-nationally; however, the sheer volume and variation of language,
culture and business practice can, as Towers Watson found, “complicate the alignment of multiple
Asian countries within a single global HR operating model”. In other words, centralizing a payroll
function across the Asia Pacific region is a considerable challenge. That said, certain areas (such
as Employee Self-Service) remain nearly universally accepted, and organizations would do wise to
look for HR and payroll technology solutions that embrace these commonly-adopted functionalities.
For instance, in terms of deploying the employee-facing side of HR or payroll core functions,
the survey report, New Horizons - No Boundaries, noted that self-service functions (for
both employees and managers) were at a 46% adoption level (rising to 70% when including those
respondents planning on implementing by the end of the year).

Asia Pacific Payroll Factor #3: Cost Drives Competition

In common with most economies worldwide, the issue of cost for Asia Pacific businesses has
become an even greater driver of payroll streamlining. As with other HR and business software, the
deployment of “cloud”, or software-as-a-service (SaaS), payroll has become a viable and flexible
competitor for traditional on-premises systems when it comes to cost, flexibility, smaller in-country employee populations, and reduced implementation times. However, it should be noted that, “global
HR technology vendors in general present a cost structure higher than the Asia market’s appetite”.
Indeed, as Towers Watson points out, an abundance of local copycat vendors and integrators are
eager and willing to offer (for much less) what is often seen as the same level of functionality.

Asia Pacific Payroll Factor #4: Stakeholder Buy-In

Although classic stakeholder management emphasizes the need to identify and meet the needs of
various interest groups – from C-level to employee – in order to engage them in new initiatives,
Towers Watson’s experience is that Asia Pacific-based businesses may present a particular
challenge. More specifically, the research and consulting giant highlights that, “until everything
has been clarified with the individual country business leaders (and accepted by them) initiatives
simply will not reach completion”. Indeed, although change management within the context of
certain organizational changes (such as a new payroll software implementation) is a well-accepted
necessity in Western-based companies; executives within the Asia Pacific region have much higher
operational visibility and input. As such, companies should be cognizant that a key requirement,
of any new approach to payroll, in this type of organizational culture is that the C-suite be highly
engaged from the beginning; and that change be presented with sufficient business discipline,
reference benchmarks and best practices, and address country- and culture-specific issues.

The Asia Pacific Payroll Landscape - The Bottom Line

The unique features of Asia Pacific business environments, particularly those newer (and less
well-established) yet rapidly rising economies, can present a stronger than usual challenge to
multinational or global organizations seeking to consolidate and centralize payroll functions across
the region (or as part of a wider global set up). As The Towers Watson report concludes that, “To
meet the complex, fluid and rapidly changing Asian operating environment, technology solutions
must be easy to adopt and quick to deploy, with a strong end-user interface and complete country
localization”. While this certainly signals a ripe market for software-as-a-Service (SaaS) HR and
payroll vendors, clearly, these strategies must also be underpinned by proper engagement (within
cultural norms) of the local organization’s key stakeholders. Only then can the usual global payroll
goals of standardization and cost savings be realized.

As with other HR and business software, the deployment of software-as-a-service (SaaS) payroll
has become an increasingly viable and flexible competitor to traditional on-premises systems when
it comes to cost, flexibility, smaller in-country employee populations, and reduced implementation
times."